We believe our financial and monetary system should support policies for decarbonization, sustainability and strategic autonomy. The 2015 Paris Climate Agreement recognizes this by calling for policed to making financial flows “consistent with a pathway toward reducing greenhouse-gas emissions and sustainable development.” We are far from that goal: on the one hand, the financing available for ecological and energy-transition projects remains well below what is needed; on the other hand, financing for polluting investments and fossil fuels has not dried up since.
We work on three levels of the European financial and monetary system :
– In the field of monetary policy and central banking, we advocate for tools for aligning financial flows with climate and sustainability objectives: green refinancing operations (preferential rates), greening the ECB collateral framework (haircuts, exclusion lists), greening asset purchase programs and new principles for supervision (focused on double materiality and more qualitative risk management).
– Second, our proposals for greening financial and banking regulations range from prudential measures such as macroprudential systemic risk buffers (CRD V) or countercyclical measure (loan to-value ratios, debt-to-income ratios, loan maturity rules), to “structural” measures aiming at actively guiding private credit flows and transforming bank’s balance sheets (credit floors or ceilings, interest rate floors or ceilings, etc.).
– Third, we need broader changes in the macroeconomic framework, linking monetary and fiscal policies in a new policy mix adapted to the EU context. In particular, we believe public finance and public banking should be strengthened. This does not preclude blend finance-options such as loan guarantees, contracts for difference, tax incentives or private-public partnerships to make new business models emerge, but in many cases these solutions prove to be insufficient.
This program is run by Wojtek Kalinowski, co-Director of the Veblen Institiute, & Jézabel Couppey-Soubeyran, scientific advisor.
For information please contact Wojtek Kalinowski, co-directeur de l’Institut.